General Sources of Shocks That Can Cause Business Cycles Include

question 89

Multiple Choice

General sources of shocks that can cause business cycles include the following, except

• A)irregular occurrence of innovations and productivity changes.
• B)monetary factors and financial instability.
• C)unemployment jumps and production drops.
• D)political events, either domestic or global.

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Definitions:

Target Company

A firm that another company seeks to acquire.

Cost of Equity

The return that shareholders require for investing in a company's equity, representing the compensation the market demands in exchange for owning the asset and bearing the risk of ownership.

Acquiring Firm

A company that gains control over another company by purchasing its shares or assets.

Real Options

Occur when managers can influence the size and risk of a project’s cash flows by taking different actions during the project’s life. They are referred to as real options because they deal with real as opposed to financial assets. They are also called managerial options because they give opportunities to managers to respond to changing market conditions. Sometimes they are called strategic options because they often deal with strategic issues. Finally, they are also called embedded options because they are a part of another project.